The Number of Oregon Leaders Challenging Organized Labor on Public Employee Pensions Is Growing

This is the legislative session Oregon's public employee unions have desired for 12 years.

Since Democrats gained control of both chambers of the Legislature in 2007, those unions have sought three-fifths supermajorities in both chambers required to pass new taxes. Last November, it happened—thanks in large part to unions' campaign contributions. And Democrats are ready to consider $2 billion in new taxes for schools.

But a growing chorus is demanding that Democrats cut something in return: the pensions of public employees.

Those obligations to the public employee retirement system—PERS—have long gobbled up school budgets, and would soon consume the proposed new $2 billion.

In other words, parents might hope to see lower student-teacher ratios, longer school years and new textbooks, but numbers show that for the next decade, the new money would have go toward growing public pension obligations.

"If the Legislature doesn't take up PERS reform, PERS will eat up 80 cents on the dollar of a $2 billion tax increase," says Jeremy Rogers of the Oregon Business Council.

The state's public employee unions disagree. "The Oregon Business Council is led by some of the most powerful corporations in the state, and it is disappointing that they continue to falsely claim we cannot fund schools and public services without cutting the benefits of teachers, firefighters and nurses," says Melissa Unger, executive director of Service Employees International Union Local 503. "Unfortunately, so far the only solutions we've seen from OBC hurt low-income and other workers."

Oregon's business community has made little headway in getting lawmakers and the public to focus on the state's unfunded pension liability, which as of February stood at $26.6 billion. That could change.

Two longtime Democratic leaders with impeccable organized labor credentials are joining the business community in saying that new revenue without accompanying PERS cuts will accomplish little. In addition to those individuals, two Portland foundations with wide reach are raising concerns that if PERS consumes the revenue from new tax increases, key constituencies, including low-income Oregonians, communities of color, and other groups heavily dependent on public services, will lose out. Such growing concerns could complicate discussions about what labor hoped would be a slam-dunk tax increase.

Here are four players standing in the unions' way.

Tim Nesbitt: Formerly head of the SEIU Oregon State Council and the AFL-CIO of Oregon, Nesbitt left organized labor to work for then-Gov. Ted Kulongoski in 2006 through 2011. Nesbitt wrote Kulongoski's "Reset Report," a hefty document produced in the depth of the recession that said Oregon couldn't afford its government. He's been preaching that mantra ever since, to the dismay of his former labor colleagues. His group, PERS Solutions, recently released figures showing pensions would consume all of the $2 billion in new taxes lawmakers are mulling—and more.

Ted Kulongoski: As a lawmaker in the 1970s, Kulongoski wrote the Public Employee Collective Bargaining Act, without which the unions would be lost. Yet as governor in 2003, Kulongoski recognized that public pension benefits were too expensive and passed legislation that significantly cut them back. He recently signed onto the group Nesbitt heads, PERS Solutions. "The rising cost of the PERS retirement program," Kulongoski says, "means that all Oregonians, young and old alike, will pay a heavy price. There must be a bipartisan effort to find solutions to the PERS problem that are fair for taxpayers and public employees alike."

Caitlin Baggott Davis: Formerly executive director of the Oregon Bus Project, Baggott Davis now runs the North Star Civic Foundation, which focuses on inequality. North Star is funded by two leading progressive businessmen, New Seasons Market co-founder Stan Amy and Jim Kelly, founder of Rejuvenation House Parts. That group is raising equity concerns about pensions. "We are mistaken when we describe this problem as business versus labor, or Republicans versus Democrats," Baggott Davis says. "Low-income people, Latino, indigenous, black and rural Oregonians are the real stakeholders in this conversation, because they will be the ones asked to pay the highest price for our statewide financial challenges."

Jesse Beason: The new executive director of the $50 million Northwest Health Foundation, Beason also says diverting tax dollars to service the pension deficit disproportionately affects low-income and minority Oregonians. Those citizens are the most dependent on government services and hurt the most by budget woes. He hopes his and other foundations can help such groups "elbow their way to the table" and become part of what has been mostly a conversation between business and labor. Beason and Baggott Davis will present their concerns April 5 at City Club of Portland